“If
the facts are against you, argue the law. If the law is against you, argue the
facts. If the law and the facts are against you, pound the table and yell like
hell.”

To
win support the Big Three have resorted to the inside the Beltway trick of
repeating the same misinformation over-and-over in the hope that repetition
will convince people fiction is fact. Of course, if the Big Three’s case is as
legally clear-cut and factually irrefutable as they claim, 2 ½ years ago they
would have filed an International Air Transportation Fair Competitive Practices
Act (“IATFCPA”) complaint with the US Department of Transportation (“DOT”). For
over four decades, US airlines - including the Big Three - have relied on
IATFCPA complaints and DOT when they believed actions by foreign carriers or
countries unfairly caused them competitive harm.

If
the law and facts are as clear cut as the Big Three contend, such a slam dunk
IATFCPA filing would have saved the Big Three’s shareholders tens of millions
dollars and ensured that DOT took appropriate action if warranted in 2015
given the six-month statutory clock. Of course, the reason the Big Three are afraid
to file an IATFCPA complaint at DOT is that they know their fictitious case is
an air ball, not a slam dunk, and they have instead deployed the Sandburg
strategy of pounding the table and yelling at the top of their lungs.

Here
are some of the myths the Big Three are spreading and the facts.

MYTH:
The US-UAE and US-Qatar Open Skies agreements expressly prohibit government
subsidies.

FACT:
That is false. The US Government chose not to prohibit state aid or subsidy in
Open Skies agreements because it was conscious that over the years US carriers
have received large amounts of state aid and continue to do. Indeed, after
9/11, Air France, Delta Air Lines’ partner, complained that US airlines
received competition distorting state aid. The word “subsidy” appears once in
both the US-UAE and US-Qatar Open Skies agreements. It is in Article 12,
Pricing, and it is not a prohibition. Rather, it authorizes a process for
government action only if “direct or indirect governmental subsidy or support”
resulted in “prices that are artificially low.” The Big Three have steadfastly
refused to pursue an Article 12 complaint and to produce the evidence – the
“facts” – that the agreement requires.

MYTH:
The Gulf Carriers are price dumping in the US market to steal market share from
the Big Three.

FACT:
In July 2015 the US Government sent written questions to the Big Three. One of
them specifically asked which provisions of the US-UAE and US-Qatar Open Skies agreements
purportedly were being violated. The Big Three refused to answer and did not even
try. As noted, the Big Three have refused to pursue a pricing complaint under Article
12 and they have failed to show a loss of market share, principally because the
Gulf Carriers serve markets that the Big Three have chosen to ignore.

MYTH:
The Big Three are not seeking to alter the terms of the existing US-UAE and US-Qatar
Open Skies agreements. They merely seek enforcement of existing provisions.

FACT:
The Big Three have repeatedly called for a freeze on all UAE and Qatar Open
Skies rights. That would breach both agreements. As reported by The Street last
September, American Airlines CEO Doug Parker in a press briefing stated that, “Our
biggest concern is flights outside the Gulf, flights from outside the Gulf
region to the US.”

Indeed,
as The Street headlined, “For American, Delta and United, the bottom line in
the dispute with the big three Gulf carriers is an end to 'fifth freedom'
Europe-U.S. flying.” The truth is that the Big Three would not have spent tens
of millions of dollars in their campaign against the Gulf Carriers if the goal
was simply to eliminate the two (2) daily Fifth Freedom(*) flights that the
Gulf Carriers, collectively, operate to the US.

Significantly,
when asked during an October 13, 2016 earnings call if eliminating Fifth
Freedom flights by Gulf carriers was Delta’s endgame, Delta’s CEO Ed Bastian
replied, “freezing and/or eliminating fifths would be a great start.” In other
words, a "great start" to a total freeze on Gulf carrier flights and
a "great start" in shifting US policy away from Open Skies and toward
the "fair skies" model of government-managed trade that Delta clearly
favors.

MYTH:
There are no potential adverse repercussions for the US and our companies and employees
if the US Government does as the Big Three ask and eliminates Fifth Freedom rights.

FACT:
Fifth freedoms are an essential element of Open Skies as defined by DOT in 1992
and are included, without restriction, in each and every US Open Skies
agreement. The US would surrender its global leadership in international
aviation policy and raise doubts about its trustworthiness to honor agreements
if it started eliminating core elements of Open Skies as the Big Three propose.
Equally important, the US’s world leading all-cargo airlines like FedEx, UPS
and Atlas Air rely on Fifth Freedom rights to build and support their global
networks which are the envy of the global air cargo industry. Without Fifth
Freedom rights those global networks would crumble.

A
decision by the US Government to renege on our Fifth Freedom commitments in the
US-UAE and US-Qatar Open Skies agreements would send an ominous invitation to
countries around the world to similarly reject the Fifth Freedom rights of
FedEx, UPS, Atlas Air Cargo and other US all-cargo carriers, harming the
largest employers in the aviation industry with hundreds of thousands employees
and the countless shippers that depend on their global networks over which
billions of dollars of American products flow. The potential adverse economic
impact for the US economy would be enormous.

MYTH:
Gulf Carrier competition already is unfairly causing competitive harm to the
Big Three and this will intensify and hurt travelers, especially in smaller
markets.

FACT:
The Big Three continue to report record-setting profits with combined net
profits for 2015 and 2016 totaling $28.8 billion. Their CEOs continue to tell
Wall Street analysts how bullish they are on future profitability. Simply put,
this is the best of financial times for the Big Three and there is not one iota
of evidence to support their Chicken Little screams that the sky will fall
unless Gulf Carrier competition is blocked. In a July 15, 2015 Q2 earnings
call, Glen Hauenstein, now the President of Delta and its EVP and Chief Revenue
Officer at the time, was asked by a Deutsche Bank analyst if Delta was
experiencing any loss of traffic or commercial harm due to Gulf Carrier
competition. Delta’s Hauenstein replied unequivocally “we are not.”

Given
increasing concentration in air service markets led by the Big Three oligopoly,
now more than ever travelers need greater competitive choice. The Big Three’s
campaign is aimed at reducing competitive choice and bolstering their already
massive profits. That is the great risk for consumers in the Open Skies debate.
As to small city markets, Gulf Carriers serve them too via code-share
relationships with US partner airlines including JetBlue Airways and Alaska Airlines.
It is the height of arrogance for the Big Three to argue that only they can
provide service in smaller markets. Interestingly, that’s what the big
incumbents did when Southwest Airlines entered the scene several decades ago.

Next
time the Big Three tell you how clear-cut their case is against Open Skies and
the Gulf Carriers, ask them why they are relying on the Carl Sandburg strategy
rather than filing an IATFCPA complaint with DOT. I think we all know the
answer.

(*) A Fifth Freedom allows a
carrier to transport revenue traffic from its home country to a second country
and onto a third country.

###

Mitchell is founder of
Business Travel Coalition and OpenSkies.travel.